Running a restaurant is a labor of love, but it’s also one of the most capital-intensive businesses there is.

From equipment and inventory, to leasing a storefront or expanding into a second location, having access to reliable funding can make or break your growth.

The Small Business Administration provides restaurant owners with affordable ways to secure the capital they need to launch, expand, or stabilize their operations.

In this guide, we’ll walk you through SBA loan options for restaurants, so you can find the ideal funding option to start, expand, or sustain your business.

SBA loans for restaurants

Two SBA loan programs stand out for restaurant owners:

SBA 7(a) loans because they offer flexible funding that can be used for working capital, equipment, inventory, renovations—or even buying an existing restaurant.

  • Loan amount: Up to $5 million
  • Terms: Up to 10 years for working capital and equipment; up to 25 years for real estate
  • Interest: Variable or fixed, typically prime + 2–3%

SBA 504 loans because they’re built for big-ticket purchases like commercial real estate or large equipment upgrades, while offering long repayment terms and fixed rates.

  • Loan amount: Up to $5.5 million (often more for energy-efficient projects)
  • Terms: 10, 20, or 25 years
  • Structure: 50% bank loan, 40% SBA-backed loan, 10% borrower contribution
  • Interest: Fixed, often below market rates

Each program comes with its own advantages. The key is knowing which loan type fits your exact goals, and what you need to do to put them to work.

Pros and cons of SBA loans for restaurant owners

Why restaurant owners like SBA loans

1. Access to working capital:

Whether you're covering payroll, stocking up on inventory, or managing a seasonal lull, 7(a) loans offer flexible funding that you can put to work fast—with as much going towards working capital as you need.

2. Favorable interest rates and terms:

Because SBA loans are partially guaranteed by the government, lenders can offer lower rates and longer repayment terms than many traditional loans.

3. Support for real estate and equipment purchases:

Need to buy a building or invest in a new kitchen line? The SBA 504 loan is designed specifically for major fixed assets.

What to watch for

1. Slower approval processes:

Compared to online lenders or revenue-based financing, SBA loans can take longer to process—typically 30 to 90 days, depending on your documentation.

2. Heavy documentation:

You’ll need to provide business financials, a plan for the funds, and personal financials. It’ll never be one-click lending.

3. May require collateral or personal guarantees:

Especially for larger loans, lenders may want additional security. It’s something you should be prepared for. Sometimes that requires you to put up personal collateral along with your business.

Which SBA loan makes sense for your restaurant?

Not every restaurant needs a million-dollar renovation. Some just need new fryers. Others are scaling across state lines.

Whatever the case may be, the right SBA loan depends on your stage, your strategy, and how fast you need to move.

Consider the guidance below.

Working capital

Best fit: SBA 7(a)

If you need breathing room between payroll and vendor invoices, SBA 7(a) loans will be your best bet.

The SBA 7(a) loan is a fit here because it allows for unrestricted working capital use (within the flexible terms mentioned above of up to $5 million in funding and repayment terms up to 10 years).

It gives you time to stabilize cash flow without choking your margins.

Real estate purchase, Improvement, or Build

Best fit: SBA 504

If you're planning to buy your building, renovate a commercial space, or build a new location, the SBA 504 loan is what you’ll need.

The 504 loan offers long-term, fixed-rate financing (up to $5.5 million, with repayment terms of 10, 20, or 25 years).

It typically requires just 10% down from the borrower, which makes it easier to preserve working capital while investing in property you’ll own and control.

To get a 504 loan, you’ll need to occupy at least 51% of the property.

Equipment purchase

Best fit: SBA 7(a) or 504

From commercial ovens and refrigeration systems to POS terminals and kitchen hoods, restaurant equipment doesn’t come cheap.

Depending on where you fall on the matrix of time urgency to size of need, you can turn to either 7(a) loans or 504 loans.

If your needs are under $500K or tied to other expenses like working capital, the SBA 7(a) loan provides faster, more flexible funding.

For large-scale or long-life equipment, the SBA 504 offers better fixed rates and extended repayment terms—letting you finance major upgrades without depleting your short-term cash flow.

Inventory purchase

Best fit: SBA 7(a)

You never want to be strapped down at the liberty of your capital when prepping for holidays or seasonal peaks.

The SBA 7(a) loan is the best fit here because it allows for working capital use—including inventory—under the favorable terms we mentioned earlier (up to $5 million in funding and 10-year repayment timelines).

It’s a flexible, low-cost way to keep your shelves stocked and your kitchen moving no matter what.

Furniture or fixture upgrades

Best fit: SBA 7(a)

Need to upgrade your dining room, invest in new booths, or improve your outdoor seating? These improvements often don’t qualify as fixed assets.

The SBA 7(a) loan covers furniture, fixtures, and other soft costs that traditional loans (and 504 loans) may not, and with more favorable terms than other loans that do.

It gives you up to 10 years to repay and the freedom to bundle these upgrades with other expenses like marketing, hiring, or signage.

Expansion (adding a new location)

Best fit: SBA 7(a) or 504

Opening a second (third, fourth, etc.) location is a major milestone, but also a major expense.

The SBA 7(a) loan is ideal if you’re leasing a new space and need flexible capital for improvements, equipment, staffing, marketing, and other launch costs.

If you're buying property as part of the expansion, SBA 504 loans offer longer terms, lower down payments, and fixed-rate financing that protects your cash flow as you grow. As previously mentioned, 504 loans can be used specifically for purchasing real estate.

Buying a restaurant

Best fit: SBA 7(a)

Acquiring an existing restaurant can be a faster route to profitability, but it requires upfront capital and a lender that understands your business model well.

SBA 7(a) loans support full business acquisitions, including goodwill, equipment, and real estate (if applicable).

It’s one of the few programs designed specifically to help entrepreneurs buy an existing business without needing a massive injection of equity.

Using SBA loans to grow your restaurant

The restaurant industry isn’t easy—but the right financing can make life a lot easier for you, and a lot more pleasant for your diners.

SBA loans offer a rare combination of affordability, flexibility, and support. Whether you’re opening your doors or leveling up existing operations, knowing your options is the first step.

Need help finding the right SBA lender—or figuring out what you qualify for? Lendio can help. One application, multiple offers, no guesswork.

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